SARS and National Budget Overview
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Questions and Answers

What type of tax is VAT?

  • Property tax
  • Indirect tax (correct)
  • Direct tax
  • Income tax

    • Normal income tax is applied on capital gains made during the year of assessment.

    False

    What is the primary purpose of withholding tax?

    To withhold tax on dividends received by shareholders.

    ________ is a tax levied on the value of property acquired by any person through a transaction.

    <p>Transfer duty</p> Signup and view all the answers

    Match the tax types with their descriptions:

    <p>Normal Income Tax = Tax on income earned Dividend Tax = Withholding tax on dividends received Donations Tax = Based on the donation of money and assets Capital Gains Tax = Tax on assets disposed of or donated</p> Signup and view all the answers

    Which of the following is NOT a direct tax?

    <p>VAT</p> Signup and view all the answers

    Indirect taxes are based on consumption in the economy.

    <p>True</p> Signup and view all the answers

    What type of tax is levied based on the donation of assets?

    <p>Donations Tax</p> Signup and view all the answers

    What is the main purpose of taxation?

    <p>To collect money for public services</p> Signup and view all the answers

    The South African Revenue Service (SARS) is responsible for drafting the National Budget.

    <p>False</p> Signup and view all the answers

    What is meant by the term 'Fiscal Year'?

    <p>A fiscal year is a one-year period that governments use for financial reporting and budgeting.</p> Signup and view all the answers

    SARS stands for ______.

    <p>South African Revenue Service</p> Signup and view all the answers

    Match the following terms to their definitions:

    <p>Natural Person = An individual human being Direct Tax = Tax paid directly to the government by the taxpayer Indirect Tax = Tax collected by an intermediary from the person who bears the ultimate economic burden Year of Assessment = The year in which income is assessed for tax purposes</p> Signup and view all the answers

    Which of the following is NOT a purpose of the National Budget?

    <p>Determining individual income tax rates</p> Signup and view all the answers

    A tax season is a specific time of year when individuals must file their tax returns.

    <p>True</p> Signup and view all the answers

    Name one type of tax commonly found in South Africa.

    <p>Value Added Tax (VAT)</p> Signup and view all the answers

    What is the primary function of the South African Revenue Service (SARS)?

    <p>To collect revenue and ensure compliance with tax law</p> Signup and view all the answers

    The National Budget includes spending by provinces and local governments.

    <p>False</p> Signup and view all the answers

    What is considered a natural person for tax purposes?

    <p>A living, breathing human being regarded as an individual.</p> Signup and view all the answers

    The financial year of the South African government runs from ___ to ___ each year.

    <p>1 April to 31 March</p> Signup and view all the answers

    Which document is used by natural persons to submit their normal tax return in South Africa?

    <p>ITR12</p> Signup and view all the answers

    Match the following tax entities with their definitions:

    <p>Natural Person = A living, breathing human being regarded as an individual Company = A commercial entity recognized under law Trust = A fiduciary arrangement allowing a third party to hold assets Estate = The total assets and liabilities left by a deceased person</p> Signup and view all the answers

    The year of assessment for a natural person runs from 1 March to 31 March of the next year.

    <p>False</p> Signup and view all the answers

    What is the role of the Minister of Finance during the National Budget announcement?

    <p>To announce the government’s spending, tax, and borrowing plans for the next three years.</p> Signup and view all the answers

    Which of the following individuals is required to submit a tax return for the 2023 year of assessment?

    <p>Non-residents who carried on any trade in the Republic</p> Signup and view all the answers

    Natural persons who are residents and have capital gains or losses exceeding R40,000 must submit a tax return.

    <p>True</p> Signup and view all the answers

    What is the threshold for residents under 65 years regarding gross income that requires them to submit a tax return?

    <p>R95,750</p> Signup and view all the answers

    Residents holding foreign currency or assets outside of South Africa valued at more than ______ must submit a tax return.

    <p>R250,000</p> Signup and view all the answers

    Which of the following is NOT a requirement for submitting a tax return?

    <p>Residents who received interest from any source</p> Signup and view all the answers

    E-filing tax returns does not require any confirmation from the taxpayer.

    <p>False</p> Signup and view all the answers

    Match the age groups with the corresponding gross income thresholds for submitting a tax return:

    <p>Under 65 years = R95,750 65 years but not older than 75 years = R148,217 Older than 75 years = R165,689</p> Signup and view all the answers

    A taxpayer can submit annual tax returns manually at a ______ or online via E-filing.

    <p>SARS branch</p> Signup and view all the answers

    Which documents are required to register for a tax number at a SARS branch?

    <p>ID document, proof of address, and three months bank statement</p> Signup and view all the answers

    Individuals with remuneration not exceeding R500 000 from more than one employer must submit tax returns.

    <p>True</p> Signup and view all the answers

    What is the maximum interest amount from a South African source that individuals below the age of 65 can earn without having to submit tax returns?

    <p>R23 800</p> Signup and view all the answers

    To register online for a tax number, you can visit the link: https://secure.sarsefiling.co.za/app/______

    <p>register</p> Signup and view all the answers

    Match the income categories with their requirements for not submitting tax returns:

    <p>Remuneration not exceeding R500 000 = From a single employer with employee's tax withheld Interest from South African source = Below R23 800 for individuals under 65 Amounts from tax-free investments = Not subject to income tax returns No other forms of income = No additional taxable income sources</p> Signup and view all the answers

    Study Notes

    Introduction to Key Concepts in Tax

    • Taxation is the process of government collecting funds from citizens to finance public services.
    • The South African Revenue Service (SARS) is responsible for tax collection and enforcement of tax laws.

    National Budget

    • The National Budget outlines projected revenue and expenditure and is announced annually by the Minister of Finance in February.
    • It covers three years of spending, taxation, and borrowing plans, excluding provincial and local government spending from their own revenues.
    • The fiscal year for South African government entities runs from 1 April to 31 March.

    Key Terminology

    • Taxation: Government's revenue collection mechanism.
    • SARS: Agency tasked with tax collection in South Africa.
    • Fiscal Year: Accounting period for government financial activities.
    • Person: Includes natural persons, companies, trusts, and deceased estates.
    • Natural Person: An individual recognized for income tax purposes.
    • Year of Assessment: Period for which normal tax is calculated; varies by entity type.
    • Assessment Return: Document submitted to SARS detailing tax information.
    • Tax Season: Timeframe for filing tax returns.
    • Direct Tax: Tax levied directly on individuals or entities (e.g., income tax).
    • Indirect Tax: Tax collected via transactions (e.g., VAT).

    Types of Taxes in South Africa

    • Direct Taxes:
      • Normal Income Tax: Tax on earned income.
      • Capital Gains Tax: Tax on profits from asset sales.
      • Donations Tax: Tax on monetary or asset donations.
    • Indirect Taxes:
      • Value Added Tax (VAT): Tax based on consumption.
      • Transfer Duty: Tax on property transfers.

    Tax Registration and Return Submission

    • Individuals must register for a tax number at a SARS branch, providing FICA documents (ID, proof of address, bank statement).
    • Online registration is also available.
    • Annual tax returns must be submitted between July and November.

    Conditions for Tax Return Submission

    • Individuals earning solely from a single employer with remuneration below R500,000 are exempt from tax return submission, provided proper tax withholding occurs.
    • Citizens must submit returns if:
      • Engaging in trade or business activities.
      • Capital gains exceed R40,000.
      • Holding foreign assets valued over R250,000.
      • Gross income exceeds set thresholds based on age.

    Annual Submission Process

    • Tax returns can be submitted manually or online via E-filing, which pre-populates information for user confirmation.

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    ETXN2624 LU1 Introduction to Key Concepts in Tax PDF

    Description

    This quiz explores the South African Revenue Service (SARS) and its role in tax collection for the government. It also covers the core concepts of the national budget, including projected revenue and expenditure. Learn about compliance with tax law and fiscal responsibilities.

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